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Rye Patch breaks ground in Florida Canyon restart campaign

VANCOUVER (miningweekly.com) – Nevada-focused project developer Rye Patch Gold has started construction of a new heap leach facility at its newly acquired Florida Canyon mine, which it bought from Japan-based Admiral Capital at the end of July.

"The company has embarked on a transformational journey to become Nevada's next new gold producer. We are creating a new and exciting company with anticipated initial annual production of 75 000 oz gold expected to begin in early 2017,” president and CEO William Howald stated.

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The TSX-V-listed company advised on Monday that since the purchase, the Florida Canyon mine has crushed the under-liner material for the south heap leach facility; prepared the primary crusher for the move from the Standard gold mine, located 6 km to the south, to its new home next to the heap leach facility; completed maintenance on the mining fleet; and is now breaking ground for the ponds and pad of the facility.

The Florida Canyon gold mine is fully permitted, has been in continuous production since 1986 and is currently producing gold from its existing leach pad facilities at the site and Standard gold mine.

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As part of its plan to reinvigorate Florida Canyon, Rye Patch plans to mine from four areas within the existing pit that constitutes a planned layback of the Florida Canyon gold deposit. The company plans to mine about 63.81-million tons of ore over an eight-year period.

It expects to achieve average recovery of 71.1%, which would yield 602 000 oz of gold over the life-of-mine (LoM). Rye Patch expects initial production from the south heap leach facility to occur in the fourth quarter and expects to achieve commercial production from the new leach pad by the second quarter of 2017.

POSITIVE PEA
Consulting engineering firm Mine Development Associates completed a May 2016 preliminary economic assessment (PEA) based on a $1 000/oz gold price for the first two years and a $1 150/oz gold price for the remaining LoM.

This resulted in a pre-tax net present value, using a 7.5% cutoff, of $65.43-million, with an internal rate of return of 41.5%.

The cash cost per gold ounce was calculated at $759/oz.

“With an orebody that shows great potential to expand the existing measured and indicated resource of 1.1-million ounces of gold, Florida Canyon provides Rye Patch with a solid foundation from which to grow and significant exploration upside along a trend that has been ignored for the past 30 years. As history has shown, the players with a large land position along a major gold trend have a significant advantage and opportunity to grow a formidable mining company,” Howald advised.

Rye Patch cautioned that the company's decision to place the Florida Canyon mine into production was not based on a feasibility study of mineral reserves demonstrating economic and technical viability.

However, all mining and auxiliary equipment required to operate the Florida Canyon mine is in place together with a team of high-quality experts experienced in mining a low‑cost operation with a successful 30-year history.

Following the restart of Florida Canyon, Rye Patch advised that it intends to advance its other nearby resource projects as well as drill oxide targets at the mine and along the mine trend between Florida Canyon and the Standard gold mine (about 10 km).

Significant exploration targets exist within the pit limits and beneath the Florida Canyon oxide deposit. These near- and medium-term opportunities will be addressed once the mine is in full production.

From an operational viewpoint, substantial synergies exist with Florida Canyon and the nearby Lincoln Hill and Wilco resource projects. The outlying oxide resources can be mined and leached at site with carbon transported to the Florida Canyon stripping and refining facility. This benefit will reduce capital costs for the Lincoln Hill and Wilco projects.

Longer-term opportunities exist along the Oreana trend. The company controls more than 180 km2 of prospective land along the trend and is one of the largest land-holders in Pershing County.